epublishing

One of the hot topics on the internet in the writer’s world the past few weeks is the two million dollar advance that Amanda Hocking just accepted from a traditional publishing house. And while it’s been analyzed to death by people a lot smarter than me, I do have some thoughts on the whole episode.

There are a good number of big-time authors who are loudly disagreeing with the assessment that Ms. Hocking will suddenly have more time to just write now that she has signed a contract with a publisher. When you figure in all the additional work she may now have to do like agent calls, publisher calls, talking to the design staff and all the new business and marketing expectations that accompany a traditional publishing contract, Ms. Hocking will probably end up with less time to just write. And then when her books actually come out, I’m sure the publisher is going to want to ship her all over creation to promote the books in person so they can earn back their advance. All that travel and promotion will certainly cut into her writing time as well.

I’m just not convinced that Ms. Hocking is going to have more time to write by signing up with a major publisher. A two million dollar advance comes with expectations that are significantly higher than a new author would normally face. Not to mention the pressure to produce something worthy of that advance, as well as the scrutiny of everyone in the industry. I think that Ms. Hocking just signed herself up for a pretty intense pressure cooker of stress and expectations for the next few years. I don’t care what the publisher may have told her, they are handing her a two million dollar advance. There are expectations attached. No publisher is going to hand out that sort of money and not exact some sort of a return. Also, publishers are expecting authors to handle a lot of the promotional aspects of their own careers regardless of their contracts. Look around at all the authors promoting themselves on Facebook and Twitter and through author websites. A good portion of the marketing responsibility is being shifted back to the author, so what exactly is Ms. Hocking going to get from her publisher. They will no doubt expect her full cooperation and attention in marketing and promoting those books so that publisher can earn their advance back.

Only then will Ms. Hocking begin to earn royalties on her work. We are talking about five hundred thousand dollars per book in pressure. Which is more money per book that Barry Eisler was offered as an advance, and he is a New York Times Bestselling author. (Eisler was offered a five hundred thousand dollar advance for his next two books and he turned that down to self-publish. Which is a post for another time.)

Some publishers were quoted as saying they were “vindicated” by the news as it proved they were not disposable commodities in an age when anyone can self-publish on Amazon.com and other outlets. I maintain that just because the publishers said they were vindicated by the news doesn’t mean they are any more relevant than they were before they got the paperwork signed with Ms. Hocking. There was a bidding war for her next four books, and every major publisher was trying to get the contract to try to prove that they still matter in the industry. All it really proves is that major publishers will spend a whole lot of money to prove a point. The odds of her earning out on her contract are fairly slim if you research the state of the industry today. The publisher is probably not going to sell her eBooks for .99 or even $2.99 as Ms. Hocking and others have in the past. So you are going to have a large group of fans that are now going to be expected to pay somewhere between $7.00 and $14.99, or more, for something that they were getting for 2.99 or less. Somehow I don’t see her legions of fans gratefully coughing up that kind of money as widely as her new publisher is hoping they will. The publishers are late to the party and they are throwing a ton of money at Ms. Hocking to prove they still matter, when she is the very example of why they don’t matter anymore. We also need to remember that the publisher’s main focus is not on the author or the books, it’s on making money for its shareholders. So the focus is going to be on maximizing their sales

According to reports, Amanda Hocking made almost two million dollars last year, on her own, with nine books available in eBook format. With that sort of money, even after taxes she could afford to hire a copy editor, a graphic designer, an accountant, and a marketing team to help her manage her business and assist with her future books. Every one of those is a business expense and would offset some of her earnings and not only help her with her books, but also lessen her tax liability. Instead she chose to accept a two million dollar advance for those same services for four books. Four books that, if we assume will sell as consistently as her other books and could be finished this year, could have earned her another million dollars in the year it will take for her new publisher to actually publish the first of the books. Four books making her a million dollars a year would earn her the advance she got in two years. And the next two years would make her an additional two million dollars. I’m not sure that she is going to make an additional two million dollars in royalties over the four books of her contract. So the question becomes was this a good move to make? Was the two million dollar advance a good deal for her?

I firmly believe that for Ms. Hocking it’s not about the money. I believe it’s more about the exposure in traditional markets. I believe Ms. Hocking wants to see her books in bookstores where she can be exposed to an audience that does not currently utilize eBooks. I just hope she is being realistic in her expectations both in terms of her publisher’s support and her own time commitment. I’m simply not convinced that she is going to end up with more time to just write.

With the explosive growth of eBook readers over the last few years, it seems like almost everyone has access to eBooks these days. Between established readers like the Kindle and Nook, and reader applications for smart-phones, laptops, and tablets, the availability of these readers is almost universal. And while there is something to be said for the tactile experience of holding a physical book in your hand, no one can deny that the world is moving towards eBooks as a major method of distribution. What does this mean to you?

We can generalize a little and break the population down into two main groups. There are consumers of content, and there are producers of content. Consumers are always going to be the driving force behind any new technology. Without someone to embrace the technology it will fail. And in a more personal light, without consumers to purchase your product or service, you have no reason to keep doing what you do. The good news is that consumers are embracing the eBook market. Between dedicated readers like the Kindle and Nook and tablets like the iPad, eBooks are currently growing at 83% according to Amazon.com. And that number is expected to grow even more, increasing as technology continues to evolve, become cheaper, and even more accessible.

So what does that mean to producers of content? It means there is a new opportunity to embrace, and it’s important to decide if you are going to jump in early or wait. Current estimates put the eBook market at roughly 11% of the book market. Which means the market is still growing and evolving and there are opportunities all around you.

The growth of eBooks has also created a shift in publishing. No longer are you limited to the major publishing houses and their rules. No longer are you bound by the dictates of the marketing departments and predefined niches of a business that requires major sales to indicate success. You still need a quality product. And you still need to make sure there is a market for what you are offering. But there is more freedom in the eBook world. And more potential profits for you and your business.

In traditional publishing, once an author manages to get picked up by a publisher, the author usually makes pennies on the dollar for their work. Advances for books are rare, so you really can’t count on any money up front. And traditional publishing schedules tend to run 12-24 months after the book is finished before it is actually produced and distributed. Meaning if you managed to find a publisher and get your book picked up for publication in February 2011, the earliest you’d see a print copy would be February of 2012. And then your royalties are going to be a minimum of 60-90 days beyond that. And while there aren’t a lot of authors that are willing to discuss dollars and cents, those that have seem to indicate that industry averages for royalties tend to run to fifteen percent of the cover price. Would you be willing to work for fifteen percent of what you are making now and wait a year to a year and a half to get your first check? On a $6.99 paperback book, a fifteen percent royalty rate means the author will be earning $1.04 per book. Before taxes.

According to the Authors Guild, a successful fiction book is considered to be on which sells five thousand copies over its publication run. Five thousand books will provide a potential profit for the author of $5250 at a fifteen percent royalty rate. Unfortunately, that payment is going to start trickling into your mailbox sometime next year at the earliest. Assuming of course your published book moves off the shelves at a good pace. Not to mention you may not see all of your royalties owed for years as most publishers will hold back a percentage to cover returns. Since you can return a book for full price, the publishers don’t count the number of copies shipped as the number of copies sold, so they don’t pay you for a certain percentage of titles shipped because they may end up with some of them back. Some authors have stated that they didn’t see an accurate sales report and royalty payment until three years after the book was published.

According to a 2008 publisher’s survey, it takes an average of 422 hours to write a fiction book. If we use the potential sales and royalty figures above, we can boil it all down to you as an author earning slightly less than $12 an hour for your book. Assuming of course you sell all 5000 books in the print run. Which doesn’t sound too bad? Provided you can wait a year or more for your $12 an hour to start trickling in.

Somehow traditional publishing is sounding like a lot of work for not a lot of gain.
So let’s look at the alternatives to the traditional publishing model. One option is self-publishing your own book for electronic distribution. (Releasing an eBook)

You obviously need a good product to start with. You need a well written, interesting book that people will want to read. You absolutely must have had the book edited properly. You no longer have a publisher editing your book, so you may have to pay someone to do it for you if you don’t have friends with the needed skills to help. Editorial expense is generally dependent on manuscript length. Costs may run one hundred to five hundred dollars, but may be significantly higher. Cover design costs are based on complexity and prices can run from one to five hundred dollars or more. You will also need conversion and layout services to get your book to meet all the eBook requirements of the various publishers, which can run anywhere from two-hundred and fifty to five hundred dollars or more depending on your specific needs and wants.

If we are conservative and choose a scenario which figures five hundred dollars for each of those three steps listed above, you have spent fifteen hundred dollars of your own money, up front, and you haven’t even sold a book yet. This is where things get interesting though. Once those steps are done, your book is now published to the eBook stores. There is no 12 to 24 month wait. It’s available and ready for sale immediately.

So let’s run some numbers for eBooks. Amazon.com will pay you a 70% royalty. So if you price your eBook at $3.99 you will be making roughly a $2.79 royalty per copy sold. If we use the same numbers as the traditional print example above and figure 5000 copies sold you are looking at $13,950. Subtract your initial expenses of $1500 and you are looking at $12,450 in royalties for your book. (Or five-hundred thirty-seven copies sold to break even.) If you sell all five thousand books, we can divide the $12,450 in royalties by the 422 hours we used above to write the book, and we get $29 an hour for our time. Using the same 5000 copies that we are trying to sell, your print books are dependent on bookstore sales over a period of years. Your eBooks are available to a worldwide audience 24 hours a day almost immediately.

So, do you have an idea or a manuscript that has been rejected by a traditional publisher because it doesn’t fit into their “marketing plans” or their preferred genre? Do you have a novel that’s been sitting in a drawer for years because you couldn’t find a publisher and eventually gave up on it ever finding a home?

Maybe now is a good time to dig out those old neglected or rejected manuscripts. Take some time to edit, revise, and polish them up to make them the best they possibly can be. Or perhaps, now is the time to sit down and get those ideas out of your head and onto the page. Are you a previously published author, whose rights have reverted on some of your older cataloged books? What have you got to lose by publishing yourself? ePublication is the growing marketplace and now may be the perfect time to test the waters of eBooks